U.S. import prices resume downward trend in March

Lucia Mutikani

3 Min Read

WASHINGTON (Reuters) - U.S. import prices fell in March as rising petroleum costs were offset by declining prices for other goods, a sign of muted inflation that supports the view the Federal Reserve will probably not raise interest rates in June.

Containers are seen stacked up at the ports of Los Angeles and Long Beach, California February 6, 2015 in this aerial image. REUTERS/Bob Riha Jr

The Labor Department said on Friday import prices dropped 0.3 percent last month after a downwardly revised 0.2 percent gain in February.

Officials at the central bank, some of whom have shown a willingness to consider a rate hike at the June policy-setting meeting, view the low inflation environment as transitory.

But the combination of low inflation and weak economic growth in the first quarter has prompted many economists to push back their rate hike expectations to later in the year.

And some economists believe monetary policy tightening will only begin in 2016. The Fed has kept its key short-term interest rate near zero since December 2008.

Crude oil prices have lost more than half their value since June on fears of a global oil glut and the refusal of Saudi Arabia and other OPEC members to cut output.

At the same time, the dollar has gained about 12 percent against the currencies of the main U.S. trading partners. Bank of America Merrill Lynch estimates the strong dollar will cut about half a percentage point off both economic growth and inflation in 2015.